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Tuesday, February 10, 2009

World Daily Markets Bulletin from ADVFN.com

US Stocks at a Glance

U.S. stocks were set to dip at the open on Tuesday on worries that the Obama administration's plans to shore up the financial sector and stimulate the economy may not be enough to contain the worst financial crisis since the 1930s.

A day after U.S. President Barack Obama warned that the recession could get much worse, investors held out hope that Treasury Secretary Timothy Geithner would restore confidence in the financial system when he unveils a plan to relieve banks of money-losing assets.

Before the bell, the Financial Select Sector, an exchange-traded fund which tracks the performance of stocks in the Standard & Poor's 500 financials group, fell 1 percent, while Bank of America shares were flat at $6.88.

Citigroup shares rose about 1 percent to $3.98, while JPMorgan edged down about 2 percent to $26.95.

Shares of U.S. property and life insurer Hartford Financial Services Group slid 5.7 percent to $14.17 before the bell after its credit ratings were cut. Rival MetLife, the No. 1 U.S. life insurer, was down 4.1 percent at $29.99.

"There's skepticism about the administration's ability to get us out of the quicksand," said Andre Bakhos, president of Princeton Financial Group in New Brunswick, New Jersey. "The problems are so deep. There's a feeling that's growing, that they are throwing good money after bad."

S&P 500 futures fell 8.00 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 60 points, and Nasdaq 100 futures declined 5 points.

In addition to the bank plan, investors will also be watching the Senate, which is expected to approve a stimulus package worth more than $800 billion on Tuesday. Geithner is due to present his bank plan at 11 a.m. (1600 GMT).

The stimulus and the bank rescue plan are a make-or-break for stock investors searching for catalysts to sustain the market's recovery attempt since stocks hit a bear market low in November.

General Motors Corp offered more bleak news on the labor market as the automaker announced plans to cut 10,000 salaried workers from its global workforce.

In other developments, Federal Reserve Chairman Ben Bernanke is scheduled to testify before the House of Representatives Financial Services Committee starting at 1 p.m. (1800 GMT) on steps the U.S. central bank is taking to provide money to financial markets.

The focus on what Washington comes with Wall Street more than half-way through the latest earnings season which has served to underscore the toll of the worsening recession on corporate profitability.

Europe Shares

European shares fell by midday on Tuesday, with banks in focus after UBS reported a huge loss for 2008 and as investors awaited the details of a U.S. banking rescue package.

At 1133 GMT, the FTSEurofirst 300 index of top European shares was down 1.1 percent at 821.01 points after closing 0.5 percent higher in the previous session. The index is down 1.3 percent this year after plunging 45 percent in 2008.

UBS posted an 8.1 billion Swiss franc ($7 billion) net loss in the fourth quarter, missing forecasts, and said it will cut 2,000 more jobs.

However, UBS shares were volatile, falling by around 3 percent and rising 7 percent as analysts pointed to inflows in the wealth management business in January. By 1136 GMT the stock was up 3.2 percent.

Other banks were down, Credit Agricole was down 3.8 percent, HSBC fell 2.8 percent and Societe Generale decreased 3.2 percent.

The DJ Stoxx banks index dropped 1.2 percent.

Geithner was due to unveil a plan to rescue stricken banks later on Tuesday, while an $800 billion-plus stimulus package was expected to be passed by the Senate.

Across Europe, the FTSE 100 index .FTSE, Germany's DAX and France's CAC 40 were down 1.1 percent to 1.5 percent.

MINERS LEAD DECLINERS

Miners retreated with a decline in key base metals prices and the DJ Stoxx basic resources index led sectoral decliners, down 4.5 percent.

BHP Billiton, Anglo American, Vedanta Resources, Strata, Antofagasta and Rio Tinto fell between 3 percent and 7.1 percent.

Energy stocks were also under pressure with BP, Royal Dutch Shell, gas producer BG Group and Tullow Oil retreated between 0.5 percent and 4.1 percent.

E.ON  dropped 1.2 percent after the company unveiled a programme to slash costs, which is expected to lead to 1.5 billion euros  of savings by 2011, but said it still wants to hike it dividend by 9.5 percent.

Shares in Swedish Handelsbanken rose 7.1 percent after it reported its fourth-quarter operating profit beat forecast, with income exceeding expectations.


Asia Markets

Japan's Nikkei stock average slipped 0.3 percent on Tuesday as the yen climbed against the euro on a report that Russian lenders would try to renegotiate debt and on growing uncertainty over the content of a U.S. bank bailout plan.

But Nissan Motor Co surged 7 percent after it announced drastic steps on Monday to cope with the recession, saying it would cut 20,000 jobs as it joined a growing list of automakers warning of red ink this year.

The euro tumbled against the dollar and the yen after the Nikkei business daily said Russian private lenders will ask Moscow to renegotiate with European and other foreign banks to postpone repayment on up to $400 billion of its private-sector debt.

Russian Finance Minister Alexei Kudrin later said the Russian government does not plan to consider restructuring the debt of Russian companies or banks.

The Nikkei erased earlier gains amid conflicting reports about the U.S. bank bailout and the fate of a "bad bank" to buy distressed assets from commercial banks, after the announcement of the plan was postponed a day to Tuesday.

Japanese investor wariness was compounded by a Japanese market holiday on Wednesday.

Three sources briefed on the plan, which is set to be announced at 11 a.m. (1600 GMT) on Tuesday, told Reuters it included a public-private partnership that could buy up to $500 billion of distressed assets, but not a standalone government "bad bank".

The benchmark Nikkei lost 23.09 points to 7,945.94 for its second negative day. The broader Topix fell 0.1 percent to 778.10.

RUSSIA WORRIES WEIGH ON EURO

The euro initially tumbled against the dollar and the yen on the Russian loan report but it later pared some losses, fetching 117.72 yen and $1.2885. The euro has recently tended to fall on a ny bad news about Russia.

Exporters slipped, with Sony Corp falling 0.9 percent to 1,815 yen and Honda Motor Co down 0.4 percent to 2,250 yen. Toyota Motor Corp lost 1.6 percent.

Japan's largest banks gained on short-covering before the U.S. bank announcement, with Mitsubishi UFJ Financial Group  rising 1.3 percent to 485 yen and No. 3 bank Sumitomo Mitsui Financial Group up 4.4 percent to 3,530 yen.

Aozora Bank, a Japanese lender majority-owned by U.S. firm Cerberus Capital Management, warned after the close that its annual net loss would widen to about $2.1 billion, and it replaced its chief executive.

It had finished the day flat after falling nearly 2 percent.

Nissan gained 7.3 percent to 280 yen as analysts mostly welcomed the various moves it announced on Monday, including its plan to knock vehicle inventory down by 20 percent by next month and reduce headcount by about 9 percent through the next business year.

Trade was light on the Tokyo exchange's first section, with 1.9 billion shares changing hands, compared with last week's daily average of 2.1 billion.

Declining stocks outnumbered advancing ones 854 to 727.


Commodities

Gold firmed 2 percent on Tuesday as gains in other commodities such as oil, platinum and palladium and safe haven demand pushed it through the $900 mark.

Traders are awaiting details of a major economic stimulus plan due to be announced in the United States later in the session, which is likely to have a significant impact on the markets.

Spot gold was quoted at $911.00/912.60 an ounce at 1418 GMT, against $895.00 an ounce late in New York on Monday. Earlier it touched a high of $914.65.

U.S. gold futures for April GCJ9 delivery on the COMEX division of the New York Mercantile Exchange rose $20.10 to $912.50 an ounce.

The platinum group metals, which are more widely used in industry than gold, have been supported by expectations of the U.S. economic stimulus plan.

Among other commodities, oil prices firmed nearly 5 percent, lifted by expectations the stimulus plan could boost demand.

Investment demand for gold is supporting the precious metal. The world's largest exchange-traded fund, the SPDR Gold Trust GLD, said its holdings rose to a record 881.87 tonnes on February 9.

Rising ETF investment has taken up some of the slack caused by weaker jewellery demand in recent weeks. Indian buyers are awaiting a fall in prices before making purchases, dealers said.

Among other precious metals, platinum rose 5 percent to a 3-1/2 month high of $1,039.50 an ounce, boosted by talk of buying by a European carmaker, as well as fund buying and interest in platinum-backed ETFs.

Later it was quoted at $1,031.50/1,036.50 an ounce, against $988 late in New York on Monday.

Investors are also turning their attention to the outlook for supply, after recent focus on falling demand.

South Africa, source of 8 0 percent of the world's platinum, expects the metal price downturn to worsen, hitting the economy through capital flight and job losses, Minerals and Energy Minister Buyelwa Sonjica said.

Among other precious metals, palladium climbed to a near three-month high of $216 and was later at $213/217 an ounce from $205. Silver was at $13.15/13.21 against $12.83.

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